Skip to main content

tv   Book TV  CSPAN  September 15, 2013 8:00pm-9:01pm EDT

8:00 pm
westward. the question is how do i set the west at? i don't want to set it up as a place where we are going to destroy another peoples. i want to set it up for what it also represents to people, great beauty, tremendous natural resources not just in terms of goals or copper or trees that can turn into paper, but because of the grand expanse of sheer physical beauty, which of course involved the makers of people. ..
8:01 pm
>> this was part of the antislavery movement in a very hostile environment. so it's very interesting in this use in the sense of women. >> brenda, can you say something about coming from literature and writing history? >> yes, yes. i am intrigued, but i am introduced as a historian, which is fine. i am flattered, in fact. history writing and historians
8:02 pm
were something that i had to throw out as my barrel of received prejudice against. but when, as i mentioned in the book, and certainly the books, and both of those cases i am writing about writers. part of what always interested me is that they live in time. as i mentioned, some like hawthorne, they were very close with a man who invented the term manifest destiny. so i was never that far from a history or writing about history or it it was just that i was filtered through and literature is something that i love very much. but it exists in time.
8:03 pm
history is embodied, and so is literature in that way. so when i wrote the book i mentioned earlier on dickinson and higgins, so much of it is nonliterary, it really is about anti-slavery, the abolition movement, what happens to poetry, how it gets published. that is historical as well. we don't just need words as native peoples. history can be how a poem gets published. so to me, moving into this book was, this particular book, and "ecstatic nation", it was a tremendous opportunity and it made me very ecstatic, in fact. you have the opportunity to be able to do what i had been drawn to all along. which means that i didn't sideline literature, if anything, it is cultural and political history. because i think of them as the same. because that is what i mean about reading them as the newspaper. we have egypt and chase bank,
8:04 pm
those who also have a story about our critic loved emily dickinson and longfellow. so there we are. thank you. [applause] [applause] >> for more information, visit the author's website, brenda wineapple.com. >> next, the former assistant secretary of the treasury for terrorist financing and financial crimes. he talks about the treasury department's war on terror, following 9/11. this is about one hour. >> i would like to say thank you to the author, juan zarate, for
8:05 pm
giving us a chance to post this. when the alarm went off this morning, voices on npr and i thought michael they would be devoted to listening to him. and i think it is emblematic in the significance of the book. the book is really quite good. we talk about the whole of government. but what that usually means is that i want your budget, and would you please send it to me. you know, that's usually what that means when you hear the government people talk about it in this way. but what i think that we are really going to listen to today is about the real whole of government means. when we brought to bear the underutilized tool that is available to governments for their national purposes in the text. and one is going to describe
8:06 pm
that and discuss that with us tonight. he is one of the champions and pioneers. is he a treasury guy or a defense got? well, that has been his personal avocation to help build america in many ways. he did it very powerfully during his role in the treasury. so we are going to explore that today listen to it. who better to bring this to all of us today and engage all of you than rachel martin. now, i don't know how this lady doesn't, her husband works for the nsc. she is with npr with the weekend edition. and has a 1-year-old at home. so she has terrorism at home and terrorist network. [laughter] and everything. but a remarkable journalists and
8:07 pm
personality. and i'm grateful and i don't know how you had convinced her to read your book, but she should've been taking care of her little son. but she devoted the time to it and will make for very interesting evening for all of us. with your applause, please welcome both rachel and juan zarate. thank you. [applause] [applause] >> well, he was half joking, but he was serious when he called and said three or 400 pages, there is financing. [applause] and i said, sure. and i've said this that i have been pleasantly surprised at how compelling the outcome of the band. as far as the topic is concerned, it is pretty darn close. >> my wife read it. >> exactly, exactly.
8:08 pm
i am inspired and thrilled to be asked to moderate the conversation. it's an important one on such an important day. everything changed in this country and for this department. the outlook for the terrorist financing. it is important. and really a tectonic shift in how many in our government have looked at the tool chest that we have amassed in order to confront al qaeda and how that threat would evolve and change what is chronicled in this book and in particular the tectonic shift that happened. with that, i would love to kind of start back and rewind the clock about 12 years. you are at treasury at the time
8:09 pm
of the september 11 attacks and i would like to know if you could give us a sense of the early days and when it became apparent to people were sitting in that building that they were going to have a role to play. but there was going to be something called financial warfare that was launched in response to these attacks. >> first of all, thank you for accepting the invitation and for doing this. you are a remarkable voice even before he took your rule on sunday edition, you have been part of this, which is admirable and i love listening to you so much. i just want to thank the doctor and csis and others. i would not have been able to craft this without their help. this is also a little bit of like a reunion. a lot of you who are part of the community who are working on this issues before 9/11 and
8:10 pm
certainly after 9/11, it's really an honor that you have bestowed upon us today. i'd like to thank you for that. 9/11 was really a dramatic day. not only for obvious reasons that you all experienced, but it was a shift in how the government thought about the use of power. it was very clear that president bush not only articulated that we are going to be at war with an enemy and we brought that war to our shores in new york and pennsylvania and washington. but also we have to think about creatively using that balance of power. the first real step that the president took in the u.s. government took was the signing of this executive order. announced on september 24, 2001. it gave the secretary of treasury enormous powers. powers that were not necessarily new, but they were amplified. in essence, opening the door to this new age of financial
8:11 pm
warfare. what it did was in power the secretary and it is regulatory and functions in sanctions and capabilities at the time, at the time of his guns and badges and law enforcement. the policy is international to start focusing on the isolation of al qaeda from the financial system both formal and informal. that really opened the door for a new way of thinking about how to use these powers. at the time we were very much focused on terrorist financing. i had just arrived three weeks before and i was welcomed by folks like jamie fraser, the current secretary of state and others, but i really didn't know what treasury stiffed him at the moment what treasury stiffed him on, to be honest this came over to work on international money laundering. but i didn't quite understand his role. and i think i was emblematic of the government at large. i don't think that many people
8:12 pm
understood what treasury could bring to bear. and the directive from the white house was to bring your powers to bear and to figure out how to go after al qaeda's money. build an international coalition, deep in the standards that you have to go after terrorist financing and do everything possible to not only stop the next attack, but to deter future funding of terrorist groups. that was really the paradigm and the cost for the first part of the book, the foundation for new approaches for the use of treasury and powers. >> so those were your marching orders? >> yes, it was part of the 8020 rule. could you describe how you shaped this? >> the mandate was to be aggressive at the time. to be as aggressive as possible in terms of use of these powers. so the secretary of the treasury of the time instituted what is in essence a management, the 8020 rule for purposes of using treasury power. and he said that we are not going to have fallas says by analysis and we are not going to
8:13 pm
do anything that is beyond want. we are going to abide by the law for we are going to be aggressive with what we can do. that meant freezing assets aggressively, which created some controversy because the use of asset freezing authorities are powerful. and we throw another on the network regardless of whether or not people are liable to freeze assets and stop those funds from the future going into the wrong hands. >> summer only 80% sure. >> yes, and under this power, only has to have a reasonable basis to believe that somebody is a terrorist or falls under the category of executive order. in this executive order and the general counsel at the time, they were seminal in counseling cracking them. they allow them not only to go after terrorists, but also those who are financially supporting or even associating with those who are financially supporting him. so would open up the potential
8:14 pm
in the directive was to use it aggressively. now, the lawyers in the room who were part of that process are probably screaming right now because they went through an interagency process that was rigorous. but the mandate was to use it aggressively, let's touch some nerves and do what we can and i laid out some of the essential examples in terms of looking at how some of the charities that have been built up over time are not only doing good works but also this problem. and that led ultimately to the shutdown of the larger saudi charity at the time. >> so there were innocent people who were swept up in his were found to be culpable are suspected of being culpable as a financial misdeed, in the end, they were proven that they were not involved in this, that this was just doing business at the
8:15 pm
time? >> it is the price of the nature of this kind of authority and the fact that we were being preventative with this tool. we were resting assets and not people. we were trying to stop bad money from going to have various groups and that meant that you had to stop the money. and if it was in the possession of people that were not culpable or we didn't have proof of intent, that was okay because that was not the standard. we had all sorts of debates particularly with our european colleagues about what those standards are. and i think that we use it judiciously and we wanted to preserve this. over time the 8020 rule grew to be 100%. there were diplomatic cost agreements, there were legal consequences if we didn't get right. the rule shifted over time.
8:16 pm
but the baseline was that we were going to be preventative and try to disrupt and dismantle financing that goes to terrorist groups. >> another pivotal event comes the creation of the department of homeland security. which stripped the treasury, a silky authorities. as you described. and it's interesting how you describe the effect on the department. can you describe this and your sons would roll was supposed to be in the post 9/11 world? >> one of the reasons i wanted to tell the story was because i think the history of that transition of the department of homeland security is not well understood from the treasury perspective, at least not outside of the hall to the treasury department. one of the dramatic things that happened was the stripping of what was then called the treasury enforcement office. the treasury at the time had about 40% of federal law enforcement under its auspices.
8:17 pm
the customs service, secret service, bureau of alcohol, tobacco and firearms be responsible for all federal law enforcement training. >> which i have to say that some may not know this rule and they might say why but those authorities do this to begin with? and a lot of them grew up over excise taxes, secret service was born out of a directive from abraham lincoln to go after the counterfeit rings that were bedeviling the country during this award. these were authorities that were sort of naturally treasure that look like guns and badges. that often creates friction with the fbi and the department of justice and other agencies. but what happen when these bodies were stripped and these functions were stripped was a real fundamental question as to what is the treasury department. if 90% of its budget in this realm is gone, is the most
8:18 pm
significant agencies are stripped out, what is the treasury and doesn't even have a seat at the table? i recounted in the book that there were times when i had to go and represent the treasury and some of my colleagues said in interagency meetings at the white house that literally the question has come up, people saying, why is the treasury here. why are they here? the remarkable questions that question is was never asked any more. the question is where is the treasury and why are they not here. and what do they have to bring to the table in terms of national security strategies. to me, that is the great success of the bureaucratic transition. frankly the magic of that period, because we were so demoralized, very much sort of kicked in the gut, but we reconceived what treasury should be. you know, you look at all the key national security issue and treasuries at the table for each of them without winking and i.
8:19 pm
>> when a person looked at you and said the list, did you have an answer in the moment? >> absolutely. i mean, this was a small caveat. the original title for the book was grill is in gray suits. part of the reason that i love that title, but the publisher didn't -- part of it was because we were not only engaged in a financial insurgency against her enemies, but we also had engaged in an insurgency bureaucratically within the u.s. government to survive. and it was actually a group of people, i was left with six people to help oversee the elements of the treasury and folks like individuals are handled sanctions and those from the criminal investigators come
8:20 pm
were still left behind. but we actually strategize and we had sort of a come to jesus moment to say, what are we, do we even exist, and why? the answer was internally into others, they have unique powers, authorities, and relationships that can impact our enemies in ways that no other agency in government can. the cia can't, we're the only ones that can touch the markets and financial system in a way that forces the isolation of rogue financial activity. treasury can do that with her powers and authorities, and we set out to do that. >> let's get into that. you write that the 21st 21st century financial commercial environment had its own ecosystem that could be leveraged uniquely to american advantage. simple as it was, this was a strategic revolution. where was the revolution command how did that work?
8:21 pm
>> revolution was in two ways. the first was recognizing that this was an ecosystem. but the ability to isolate this from a financial perspective, harnessing the fact that financial actors are held as the coin of the realm in their financial reputation and risk. really that bad, and of itself, that motivation was a core element of the ecosystem. we could impact it, we could actually impact how non-bank financial institutions have decided to do business with north korean actors. so understand that was an ecosystem. the second revolution, i think was what mattered most was what the commercial institutions decided in the compliance officers. it became more important to us
8:22 pm
as to how the ceos of banks around the world reacted and how foreign ministries were reacting. at the end of the day, it was the financial actors to determine whether or not they were going to open the accounts, wire money, issued a means, allow financial activity to go forward. and if they were not, people were blocked from the financial system, and it didn't matter what the finance minute and turned minister said. one of the things we came up against especially in the later years was just the grave consternation that european countries had for the fact that we were meeting with their financial institutions and they were taking steps that would further what was mandating and what was frankly wanted. but those banks were more concerned about their bottom line and the financial risk them the reputational risk than anything else. again, it was a simple proposition, but what we did was
8:23 pm
we said that there is a strategy to actually impact this centrally. i think that that is why you have seen these financial pressure campaigns and other things to work in ways that people have not even imagine, you know, just a few years ago. >> we are not talking about sanctions, you are talking about something different. you were talking about isolating and convincing convincing the ceos in the border and said it's not immoral, it's just bad business to do business with these rogue countries. >> yes, that's right. sanctions are a core part of it. the way to the u.s. treasury has innovated this in the way the europeans do this is very critical and important as well. but it's part of what i call financial suasion. how do you impact what organically rejects the list of financial activity. how can we profit system where
8:24 pm
you will align your national security interests with a financial interest. so you are right. it's not just sanctions and classic sanctions but the use of sanctions and enforcement mechanisms, laws, international standards, signs, everything in the toolkit to actually set the ecosystem and competent. treasury today is masterful at it. they do this very well. it's one of the great tools but i think the u.s. government should bring to bear in many ways. >> it is not perfect as you write about. several different case studies, most notably north korea, which is a page turner of this section . you write about the shortcomings and how the treasury's goals in this kind of isolation but not
8:25 pm
always measure up or lineup with the goals of other agencies or other departments and the government. can you talk a little bit about those shortcomings and kind of how you navigate this? >> i think there is an inherent tension with these kinds of campaigns. keep in mind that this is about not just telling banks want to do, but it's about focusing on illicit conduct, conduct based sanctions order activities that we are focused on. the point of this is it often is difficult to move the agenda for moving this to the diplomatic goals. the north korean example is a great example of why this is different than the classic sanctions. the sanctions pre-9/11 was driven by diplomacy. in the post-9/11 period, the way
8:26 pm
we applied it towards north korea, what we did was to focus on north korea's illicit financial activity. the soprano state which deals in drug trafficking and money laundering and counterfeiting hundred dollar bills is engaged in with an activity. we focus very much on that element of the north korea portfolio. the problem is there is a divergence where juxtaposition between the diplomats make a deal and to have chips on the table to trade. in this kind of pressure, it is basically about cleansing and protecting the international financial system. what you have with north korea, for example, was our ability to actually isolate the north koreans in a way that they had not felt before. a senior white house negotiator in private, you finally found a way because you had isolated them from the banking system.
8:27 pm
with one domestic regulatory act. but the problem was at work too well and it got in the way of the party talks and the diplomats wanted to on monday. what we try to do is not good system in doing business and unwinding what we had to do, telling them to do business with north korea. so it became a very tense interagency process between the president and the state department and a difficult episode in diplomacy because we gave away leverage to early in the interactions with north korea. >> will that undercut the efforts? specifically we are talking about section see 11. does that make it less effective they are susceptible to geopolitical interests and national security concerns? >> i think so. i think the danger is that you have not only the potential
8:28 pm
overuse of these powers. but you also have the potential that there is a divergence of interests between the treasury and state departments or even between the treasury and other parts, for example, the cia and the intelligence committee, in terms of wanting to take action and the committee wanted to take stand back and watch. but absolutely, i think there is a potential of tension there that is yet to be resolved because we have the president talking about negotiations and the question that he will raise and already has begun to raise and how can the economy improved and how can sanctions be lifted. the question on our end is how do you unwind it. because the baseline of the preacher turned pressure that we have put on iran is that basis of suspecting illicit activity. it's not because they are engaged in a nuclear program, but because he activities are
8:29 pm
potentially detrimental to the financial system. so how you unwind that becomes a very tricky venture. it gives a sense that these are just political tools to be tossed around by diplomatic chips and then it really starts to lose its resonance and effectiveness globally. >> getting two questions, but before we do, ask you first about syria. there's people that have questions. but we read about this case study and the warfare used by the regime of bashar al-assad. as we look at where we are in this moment in syria, the ute look and see the opportunity for some kind of financial pressure that would actually make a difference in a moment like this? >> i think it is difficult. one of the points i try to make in the book is that these powers and campaigns have been very
8:30 pm
successful and in a sense they have been thought of as the alternative to diplomacy and military power. often seen as the silver bullet for some of these problems. but it's not, unfortunately. it is part of a set of tools and strategies to build leverage. i am not pollyanna-ish enough to think that this would actually stop what assad is doing and the atrocities in a country of syria. that being said, i do think you can build on what has been done. it has done a fair bit on syria. it has not risen to the level of attention of other things, but it has resulted in seeing them do some other things like isolating a syrian bank, a significant sort of move in terms of coordination with gulf related countries.
8:31 pm
trying to isolate financial actors are not only engaged in corruption but tied to iranian support. that is very powerful because of financial community doesn't want to deal with the iranians and certainly doesn't want to deal with the syrians either. but i do think that there is a moment for implementation and this is probably it. we just have to have the political will to say that we are willing to take some risks in terms of our diplomacy to otherwise go after syria more aggressively. i will give you two examples. the first is i think that we should launch a preemptive regime for assad and his cronies. to say that traditionally in the way that we have done us, or even the qadhafi freezing of assets, those have been sort of after-the-fact. post revolution and why don't we do that now.
8:32 pm
we have declared it illegitimate and corrupt, we have found that they are engaged in atrocities including chemical weapons. so let's go after their assets now. what's leverage the international system. all of them in this to look for these assets and let's go find them and make it a concerted effort and maybe split elements of this regime. the other thing is there are no doubt russian banks who are assisting with providing financing with weapons and perhaps a lifeline for bashar al-assad. perhaps we hit a russian bank that serves as a necklace. sending a clear message to the russians, the russian banking system, the banking system at large that we are playing for keeps and those are a couple of examples where we want to ratchet this up, we probably could. >> and other people in the audience who have been
8:33 pm
discussing the book. i think we have a couple of microphones wandering around. if not, we can keep blathering on a pair. if you don't mind waiting for my found. introduce yourself if you will. >> i would like to tell you a little bit of the story and i will ask people the questions then. i was in markets very heavily and deeply for some 25 years before the crisis began. i went through those markets with the crisis and sell them directly into many of things you're talking about. most of us cannot figure out what was going on, but we knew that something was going on. usually when we reached that state and the financial community, we look at the government and we suspected you guys. but we cannot could not prove it. now comes the question. at the core of all of this is
8:34 pm
the protection of the u.s. dollar. if we lose that, it is game over. there's a lot of counter plays going on against you now, what you did on wheat and sugar in syria, which reveals what you just talked about, it has already tipped the hand, there is a discussion going on to do direct trading and a lot of significant other alternatives that are weakening the dollar. what is a treasury departments natural checkmate if we do begin to damage this currency, because that is game over. >> you raise a great point. i talk about this in the latter part of the book. the challenges and certainly the challenge to the dollar is essential. all the things he mentioned. also bartering and exchanges, more and more often. i think it is the private
8:35 pm
sector. in order for this private to sector to work, the question is how do you build this and how are you prompted to take the right steps? is the steps were taken, and i talk about this is a tipping point, it is actually forcing the good actors in the system to retreat from not only use of the dollar, but providing banking services or financial services board at risk jurisdictions, our policy of exclusion from the financial system is actually doing damage because it we are losing the inclusion that allows us to function. so there is a very healthy but delicate balance between inclusion and exclusion of the financial system. i think the bright minds of treasury understand that. so it's a matter of calibrating how hard we go. but i think that natural check
8:36 pm
is the private sector itself. that is why they have these natural checks between the private sector and the treasury. it's one of the things that make it unique, that we have a dialogue on this basis. by the way, i am no longer in government. so to be here is historical. [laughter] >> that raises another question. that is about the risks of over designating. because it is a balance. if every other day treasuries during a different designation of a bank that is doing some nefarious business, does it lose its power? >> i think it potentially does. i think that these powers are best used not only on issues of national security, but also in ways that are targeted and focused. you do run the risk that these powers are so attractive.
8:37 pm
the powers between diplomacy and war. people have seen that they are effective. congress and administration officials want to use these powers and they want to use them for everything. i think some of us should take a little bit of blame. i know that i will. what happened is that we adapted the terrorist financing paradigm and started to apply it in other areas. the ones that were critically important like proliferation were transnational organized crime or looking at kleptocracy. so you have to be careful how far you take it. because you do when the risk that it starts to blunt the effectiveness. as i just said, it starts to drive the private sector away from wanting to do business in potentially risky zones. it's an ecosystem. it has to be taken very carefully. if you don't have some of these checks come you could run the risk of overusing the authority
8:38 pm
or exclude us from the market. >> you also raise the risk of allowing a space where other financial institutions can come in and fill that space is the sanctioned bank has this. >> yes, that is correct. one thing that i would worry about in the white house is that you start to see the countries that were isolated starting to band together, a little bit like the alliance of financial roads. trying to help each other evade sanctions and create alternate ways of raising money. the trick there is do they have the facilities to do that and venezuela has done that historically now for the last few years, enron, in iran, for example. we have seen this, belarus as well in certain cases. so the question is how can we
8:39 pm
continue to isolate is about creating a shadow network or an alliance of financial roads that serves to circumvent and make sure that the dollars are still central and new york is strong as a banking center and we are a central place for capital investment. i think the fundamentals of america's economy and its strength globally is a part of why this power even works. the less powerful we are, the less our economy runs, the less the dollar is the central and the harder it is to implement these strategies. >> thank you. thank you for your service, juan zarate. thank you for this book. could you make comments, please, on the state of cooperation of governments and other major money centers? london, singapore, tokyo.
8:40 pm
how are we doing in bringing them into this kind of approach that the treasury has put into place? >> thank you. he did great work in iraq and we thank you for your service. when you think about the international coalition, what is interesting about it is we build coalitions won three lines. we did it with counterparts. so the finance ministry and the central bank of the world actually became very important actors in it, including the financial intelligence. secondly, the banks do we have talked about and third, the bank as well. certain countries like switzerland or luxenberg become more important in those kinds of alliances. it's less about nato and more about the banking centers. so i think one of the successes
8:41 pm
of this period, and it is a constant challenge, is having a banking center in line with u.s. policies. a lot of this credit goes to treasury officials like john taylor and others who are involved in this, trying to ensure that the major economies were adopting the same standards and were implying that as we started to isolate iran and north korea and others. i think that has gone relatively well. where you have some friction and it's worth watching on the tax side. and i think some tax treaties, the treatment of some tax transparency has always been a point of friction among banking centers. that is one that i think that the u.s. is trying to deal with quite aggressively and one that will continue to present some challenges between the traditional banking centers. >> yes?
8:42 pm
>> hello, i am with human rights first and i welcome your comments on the russian banks and wanted to try you out on the more. specifically on the issue of how to deal with a friend and enemy alike russia. last week we were a little bit of a different place. the two points that you raised about the preemptive search for assad's money and how to go after the russian banks are all -- all of those strands converge on russia and russia's decision to arm the rebels. i'm wondering if you could talk about how he would proceed out without running some of the hazards of having this politicized or taking a major relationship were sending shockwaves through the financial system. thank you. >> i think you have to do it delicately. historically with the treasury has done has been to focus on conduct.
8:43 pm
this isn't a political maneuver, but one that relates to the sanctity and the protection of the financial system. so in the north korean context, for example, we picked a bank that was a very bad thing. when we targeted it because it was facilitating with brain activity. they also targeted it because we knew it wouldn't necessarily upset the chinese in the first instance. we knew that it would send a clear signal to the markets. finding the right example is important. we have seen treasury do this recently with doing business with the iranians. as well as this. but the import here is you can pick the right bank as both an example to the market and an example diplomatically without destroying the relationships. i imagine there is probably a russian bank or two goods serve as a sacrificial lamb in this
8:44 pm
effort and would really be sense and clear messages. but we have to be careful not to over politicized. >> let's go to the gentleman right here in the second row? >> thank you. all of this exercise started after 9/11 because it was a direct security threat. the you have row players are actors and they had been directly considered a source of threat to the security of the united states. is there any perception to the threat that a corrupt government that is not directly involved in any security to the united states but as a threat to the security of their people and connected with the masses? and are there any measures being considered to address this issue
8:45 pm
>> how they affect the ecosystem? >> that is a great point. i think the most dangerous thing is state actors that amplify and enable nonstate actors to access the financial system. so you see that in two ways. the first is where you have states like china that serve as outlets for those coming under financial pressure. in the book i detail how the chinese and north koreans with trading companies have largely evaded sanctions over the last few years and developed protocols for doing so. so you have states to do that and you also have states that are involved in corruption. we have talked about the mafia states. that is a real problem. where you have states that have direct ties with organized criminal groups and purpose we leverage the nonstate networks to access the financial system and empower themselves and enriched themselves. what is dangerous is that the
8:46 pm
nationstates have access to not only protocols of facilities. one of the things in the north koreans have done traditionally as the user embassies to courier money back and forth and be able to deposit things and that is why you see the counterfeit notes show up in places like yemen and peru and taiwan. it's when the nationstate is mixed with these nonstate actors who engage in profit making illicit activities that really are dangerous not only the ecosystem and national security as well. >> yes? >> thank you. hello, i am from a group and north korea. in the case of financial sanctions and north korea, there have been some humanitarian consequences with difficulties
8:47 pm
that we might've been able to see in the country. the agencies have had difficulties getting money into the country to pay the bills. is it possible for the treasury department or the u.s. government to create channels for humanitarian aid for these cases without disrupting the ecosystem and wants to shape in accordance with national interests? >> that's a great question. it is certainly a challenge. i think sort of the maximum use of this isolation. it can do some damage. we have seen it's not just an example you have given, but in remittance operations, terrible contributions. that is always a balance and challenge. there is a former counsel to can tell you how the treasury department actually issues regulations and licenses to allow for those kinds of humanitarian exemptions.
8:48 pm
one of the interesting things that you have seen the treasury do, and this goes to a more positive agenda is to allow licenses for categories of exports or categories of financial dealings and actually allow for the kinds of goods and services to get into countries that we want. for example, technology to get to opposition movement in places like iran. that has been done fairly recently and so banks and exporters know that they can export them, perhaps with some danger, but yes, there are the vehicles for that. and we have seen the treasury department use that strategically to affect some key policy goals. >> serve, in the back. please go ahead. >> thank you for an excellent book. i guess i have one question.
8:49 pm
just one question on section c-11. it is helpful in regards to the transactions and jurisdictions and financial institutions from the system. i do feel that one of the drivers that other jurisdictions do not have a section c-11 system. were they doing to make other jurisdictions designed something like section c-11? >> thank you very much and thank you for your scholarship on these issues as well. one of the interesting things especially from the president's speech last night in the debate about the united states being an indispensable nation in power. it is clear that that is the role we play we talk about these financial campaigns. that is not to say that other countries haven't done quite a bit but they don't have initiatives and strategies.
8:50 pm
but it is often left to the u.s. treasury and the u.s. government to actually drive these strategies home. the european union has actually been fairly aggressive in recent years on things like iran sanctions and even in their legal system, coming across difficulties with the number of the banks, for example, challenging the listing and actually winning in that challenge. a number of al qaeda financiers challenging and winning in the european system. so there are challenges to the system and i think at the end of the day we still aren't the indispensable nation and treasury is the indispensable party and driving what happens in the ecosystem. that requires clarity of policy and good strategic thinking and execution. >> the gentleman in the back? demark hello, thank you for spending time here.
8:51 pm
americans ascribe to what you think are instruments of national power might be. i would say, well, military and state department. hopefully we can bring attention to us and it will get widely understood. two things. what other interest in national power do you think can be brought better to focus to pursue our national interest, and as october is coming up, what do you think the team would be who has the best shot at the world series. [laughter] >> well, my angels are suffering as they are, so i can't comment on that. but it's a great point. we are always bemoaning the fact that we don't have enough tools in the toolkit. this is something that madeleine albright talks about. in some ways we have added to that here. so i would hope that we would
8:52 pm
see that we have a set of actions we can take to give us the types of things that we are more aware of. i think this is a lesson of the use of this kind of power. in the 21st century in a globalized world economy, it is often the nonstate actors that have power and influence. we boom on the fact that the u.s. is not good at street craft as the arab spring has emerged. what we learn? we learned you can try to leverage the power and influence for positive agenda is. those that are in line with u.s. interests. whether it is a human rights agenda or something else, there are actors have their that are in line with our interest. and i think the trick there in the 21st century is figuring out how you're actually leverage that power. and how do you create strategic suasion to complement financial
8:53 pm
suasion so that people start to see that our community is an asset and a resource. but the fact that we have americans who are helping to run this malay traditional ve pakistani business an aet.doing business ant is the fact that social activists can draw 11 million people using a facebook campaign against terrorists, that is an asset. so thinking differently about how we use power in the power of the individuals themselves, i think it is pretty important. we often talk about what what is done. i think the 21st century will be more about what the super empowered individual can do not just for nefarious purposes, but on the positive side. i think and i hope that that is one of the lessons that we can do over the last 12 years.
8:54 pm
>> thank you. i am tom sanderson and i would like to say that i speak for everyone here am i believe, and it has been tremendously rewarding to work with you. thank you and congratulations on the book. what you were able to accomplish in your successes demonstrates that you are able to influence the formal banking system. can you talk about the informal banking system and how difficult it is to impact things like this? >> it's a great question and one of the great challenges. the tools that we have talked about are most effective when we are talking about the financial system. i think it is a little bit of a false paradigm to think of the informal sector and no ties in between. what i try to do is explain what the network is and what they do.
8:55 pm
it is this formal system, basically a brokering system kind of like western union. the interesting thing about these networks is that they keep records and the brokers want to know who owes them and there is record keeping. there are transfers, settlements between brokers using bank accounts. there are ties between the informal system in the formal system. even i was very critical when talking about piracy and using these tools against piracy. would we going to do, launch them and attach a land rover and what we going to do? but you have seen in your own research that that illicit trade and finance actually ultimately starts to in fact impact the formal system.
8:56 pm
so in places like this you have baking senators built up against these financial networks. so at some point the ligaments of the financial system can be impacted. but that's not to say that it's easy or that it has been done as effectively. but it can be effective. the other thing that is a challenge are the new technologies that are emerging. those that not only impact the role of the dollar, but the ability of law enforcement to know how this is operating. the fbi has put out a number of this by criminal groups and we have to watch the crazy space for these purposes as well. >> questioning the gentleman in the back? >> rich davis from artists, juan
8:57 pm
zarate, congratulations. >> thank you. >> putting on the spot policy wise, assuming that you had a policy position today. we were considering the issue of nonproliferation, particularly around this. recognizing that you have state actors and potentially nonstate actors that are in pursuit of proliferation. what opportunities are there for the instruments of treasury to be able to actually prevent proliferation and in countries that might be reactive to iran, whether it be saudi arabia or others? one caveat would be to recognize that oftentimes you have nuclear power plants because they cost so much, for example, and oftentimes they are able to be used for plutonium or enrichment. oftentimes they are syndicated loans that are actually used to pay for them. are there any tools that can be
8:58 pm
used in that fight? >> a great and complicated question. i think one of the huge challenges, not just in the financial space, but with trade, is the problem with dual use items. you have the challenge of goods that are potentially being used for normal commercial purposes and nefarious purposes. one of the things that we did that is effective was we transplanted the paradigm of financing on the issue of counter proliferation. and so now if you talk about the compliance officers and banks or the financial action task force, if you look at the standards they are anti-money laundering, counter perforation financing. and it's hard to say. so you have the tools, you have standards set internationally.
8:59 pm
the trick is politically what you decide to do. there are sensitivities around these programs. mixed agendas in terms of where they fall in the arena of priority. the whole question of can weapons be a precursor and it will now fall to the top of the scale, people saying "the new york times", why were we worried about this before. clearly we were, but things like nuclear proliferation, terrorism from other things, fall two line. so i don't have an easy answer for you. but the system is set so that you can use sanctions and you can use the financial pressures that we have used all along to go more aggressively after networks that matter. i think that that is the kind of system that you would have needed to go after, but relied
9:00 pm
on financiers and switzerland, fires in malaysia and the ability to shift places like libya and elsewhere. i think we have created enough attention that we now need the political will to start going after these networks. that takes political guidance and a strategy. >> thank you. i think we have one more question. as the moderator with the way to give you a chance to make some closing remarks. you talk about an ecosystem of bad banks and terrorist networks and so forth. in the beginning, right after 9/11, there was a moral imperative. it wasn't a tough sell to get cooperation. i'm wondering if you could talk about the evolution of that. is that cooperation, which is really

40 Views

info Stream Only

Uploaded by TV Archive on